The outlook for Wednesday was for stocks to be weak but to advance. They did advance for a while but by the end of the day, reports of rioting in Athens along with Fed Chair Yellen’s comments that interest rates were on track for a rate increase this year ended the 4 day advance for stocks. After such a strong rally, consolidation along with profit-taking is only natural.
Advance Decline Numbers for July 15 2015
Volume rose slight on Wednesday with 3.3 billion shares traded in New York. 65% of all volume traded was to the downside. By the close new lows had jumped to 101 and new highs stood at 104. The jump in new lows may set the market up for a down day on Thursday.
Market Direction Closings For July 15 2015
The S&P closed at 2,107.40 down 1.55. The Dow closed at 18,050.17 down 3.41. The NASDAQ closed at 5098.94 down 5.95.
Market Direction Technical Indicators At The Close of July 15 2015
Let’s review the market direction technical indicators at the close of July 15 2015 on the S&P 500 and view the market direction outlook for July 16 2015.
SPX Market Direction Technical Analysis for July 15 2015
Stock Chart Comments:
The S&P advance ended on Wednesday but losses were very small, especially considering the jump in new lows back to just over 100 stocks. The 20 day simple moving average (SMA) turned sideways on Wednesday. The most important indicator on Wednesday was the closing candlestick which was a doji-cross which as regular readers know often signals that a down day is coming up.
Support and Resistance Levels:
These are the present support and resistance levels. These levels have hardly changed in months as the market continues to move sideways.
2100 is light support. Stocks will have to stay above it to change it back to solid support and convince investors that the market has staying power and will push well beyond 2100. That still does not appear to be the case.
2075 is light support. Below that is 2050 which is also light support. Stronger support is at 2000 which has repeatedly held the market up throughout each pullback in January and February.
Weak support is at 1970. Stronger support is at 1956.
1870 and 1840 are both levels with strong enough support to delay the market falling and should see a sideways action attempt while investors decide whether to sell or buy.
The other two support levels are 1775 and 1750. I have explained that these two are critical support for the present bull market. While 1775 is important it is 1750 that is the bottom line.
A break of 1750 would mark a severe correction from the most recent high. This would be the biggest correction since April 2012. A pull-back of that size would definitely stun investors and bring to question whether the bull market is finished.
Momentum: For Momentum I am using the 10 period. Momentum is positive but turned sideways.
MACD Histogram: For MACD Histogram, I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9. MACD (Moving Averages Convergence / Divergence) issued a buy signal July 14 which was confirmed on Wednesday.
Ultimate Oscillator: The Ultimate Oscillator settings are: Period 1 is 5, Period 2 is 10, Period 3 is 15, Factor 1 is 4, Factor 2 is 2 and Factor 3 is 1. These are not the default settings but are the settings I use with the S&P 500 chart set for 1 to 3 months. The Ultimate Oscillator is positive and still climbing.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal has changed to up.
Slow Stochastic: For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic tries to predict the market direction further out than just one day. The Slow Stochastic is signaling up for stocks.
Fast Stochastic: For the Fast Stochastic I use the K period of 20 and D period of 5. These are not default settings but settings I set for the 1 to 3 month S&P 500 chart when it is set for daily. The Fast Stochastic is signaling up for stocks.
Market Direction Outlook for July 16 2015
The closing candlestick indicates that Thursday or Friday will be lower. Presently it looks like it will be Thursday as investors worry about Athens and the worries over interest rates are also back in the news.
Momentum is stalling which often signals a day or two of weakness for stocks. Technically though the indicators are still positive. Therefore any dip on Thursday should be taken advantage of as the trend higher still looks to be intact.
For Thursday weakness is expected but the outlook remains up for stocks even if Thursday ends up being negative.
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